President Trump announced a 50% tariff on copper products, but excluded the primary raw material, refined copper. On Wednesday, COMEX Copper Futures prices in the U.S. plummeted, recording the largest single-day decline in history. Prior to Wednesday afternoon, U.S. copper prices were about 28% higher than the benchmark copper futures on the London Metal Exchange (LME), as the market had expected all refined metal imports to be subject to tariffs.
On Wednesday, local time, U.S. President Donald Trump announced a 50% tariff on copper products, excluding raw refined copper. The price of copper in New York plummeted by about 20% within minutes.
U.S. COMEX Copper Futures prices plummeted, recording the largest single-day decline in history. Prior to Wednesday afternoon, U.S. copper prices were about 28% higher than the benchmark copper futures on the London Metal Exchange (LME), as the market had expected all refined metal imports to be subject to tariffs.
Additionally, shares of U.S. copper producer Freeport-McMoRan Inc. fell by about 10%, and Southern Copper's stock price dropped by more than 6%. The latest announcement reduced the premium on U.S. copper prices.
For companies that primarily export refined copper to the U.S., such as Chile's state-owned Codelco, this decision is a major positive. Codelco Chairman Maximo Pacheco stated, 'This is good news for Chile, for Codelco, and for our customers in the U.S.'
Trump announces a 50% tariff on imported semi-finished copper and other products starting from August 1st.
According to CCTV NewsOn July 30, the White House announced that President Donald Trump had signed a proclamation imposing tariffs on several categories of imported copper products, while excluding raw copper materials.
The announcement indicates that a 50% tariff will be imposed on imported semi-finished copper products (such as copper pipes, copper wires, copper rods, copper sheets, and copper tubes) and copper-intensive derivative products (such as fittings, cables, connectors, and electrical components) starting from August 1st.
The White House stated that copper input materials (such as copper ore, concentrates, blister copper, cathode copper, and anode copper) and copper scrap are not subject to the 'Section 232' or reciprocal tariffs.
According to Section 232 of the U.S. Trade Expansion Act of 1962, the U.S. President has the authority to impose tariffs or set quotas on imported products based on considerations of National Security.
The Trump administration stated that these new tariffs, following the previously imposed tariffs on steel and aluminum, aim to boost domestic industries and address 'trade imbalances.'
The White House noted that these copper tariffs will not be applied in addition to the tariffs on car imports. If a product falls under both categories, the car import tax, rather than the copper tariff, will apply.
Additionally, the White House mandated that 25% of high-quality copper scrap and primary copper products must be sold domestically. However, this export restriction is unlikely to have a significant impact in the short term, as approximately 40% of U.S. copper scrap and 75% of copper concentrate are already processed domestically.
On July 9th, U.S. President Donald Trump announced that a 50% tariff would be imposed on all copper imported into the United States starting from August 1st. U.S. media warned that this move could lead to a surge in input costs for U.S. manufacturers, dealing a severe blow to the U.S. manufacturing sector.
Trump's actions once again unexpectedly disrupted the market.
Analysts point out that the above decision is another unexpected disruption by Trump in the copper market. Earlier this year, when Trump first hinted at the possibility of imposing tariffs on copper, it led to a significant rise in US copper prices relative to the global market, triggering a rush to import copper into the US and generating substantial profits for some of the world's largest metal traders.
Earlier this month, Trump further announced that he would impose a copper import tariff as high as 50%, which is double what most market participants had anticipated, pushing US copper prices to record highs.
Excluding refined copper (i.e., electrolytic copper) from the list of taxed items is expected to further disrupt global copper trade flows. Copper, due to its extensive use in applications such as wiring, is a critical metal for the global economy. The large volumes of copper shipped to the US in recent months may now be re-exported.
The distinction between refined and semi-finished copper in the tariff policy was a result of lobbying by the copper industry. Key industry figures argue that the US currently lacks sufficient capacity to immediately replace all copper imports.
Michael Haigh, Head of Commodity Research at Société Générale, stated: 'If electrolytic copper is excluded, the arbitrage opportunity will disappear. Market prices should converge.'
Copper is the third most consumed metal globally, after iron and aluminum. According to the US Geological Survey, the US relies on imports for about half of its copper, with the majority coming from Chile.
Editor/Melody